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Income inequality measurement is one of the major instruments of macroeconomic policy makers all over the world. It has been used for more than two centuries now for the purpose of economic planning and forecasting. It has been defined as the difference between the income of a rich person and that of an average one. Income inequality can be measured in many ways, depending on the country, the type of analysis being done and the preferences of the different parties involved in the analysis. There are two general methods of income inequality measurement: the microlevel and the macrolevel. Microlevel measurement of income inequality is done at the level of individuals and families. In this method, there is no special reference to a given group or category, as such. Rather, each…

If you are looking for ways to measure income inequality, there are three approaches that are popular with scholars. The first two come from the political science literature. The third comes from the economics literature. In this post, we explore the idea that income inequality can be measured using macroeconomic variables and micro economic indicators. Economic theorists usually measure income inequality using macroeconomic tools. These include national income accounts, national income estimates from private enterprise, and national health estimates from Statistics Canada. These examples support the view that it's important to study the robustness of this income inequality concept using a range of macroeconomic indicators. Also, using a range of macroeconomic variables allows for more meaningful examination of the pathogenic potential impacts of gaps in the income spectrum across the…